Ep. 7 - How to Start a Day Spa (Beauty Therapy) Business from Scratch

12 Jul 2020

How to Start a Day Spa or Beauty Therapy Business from Scratch - Every week we will be chatting with business owners, helping them to bust through the challenges they are facing with their business in our Fix Your Business interview series.

In today's episode you will be learning about how to not only how to start a Day Spa Business but specifically how to Grow a Day Spa Business to 6-figures in just 12 months.

If you want to Grow Your Day Spa or are learning about Starting a Day Spa Business from Scratch, then watch the video now!

What to expect in today's episode:

0:00 - How to Start a Day Spa Business From Scratch
5:00 - How to Run a Beauty Clinic
5:40 - What's the difference between a Day Spa and a Beauty Salon?
7:46 - How are Clinic Prices Calculated?
10:44 - Is a Salon a Profitable Business?
18:01 - How does it Cost to Start a Beauty Salon?
24:20 - How to get more clients in your beauty clinic

Watch the Episode Now:

About my Guest:

My guest today is Laura Davies, Founder of Florence Day Spa. The business turned 2 years old on the 1st June. It is a day spa based within a sports centre. We offer all aspects of spa, general beauty, and some aesthetics therefore our clients base includes, regulars, gym members and one-time occasion visitors.

There is currently me and three other therapists whom all specialise indifferent things. The business is set to expand to a second beauty site and the introduction of education in the coming months. I have recently taken the decision to outsource my social media for it to be consistent.

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The Full Transcript:

Robin - If you're starting a day spa business from scratch than this episode of Fix Your Business is definitely going to be for you. We'll be talking to a business owner about how she grew her day spa business to six figures in less than 12 months. [upbeat jazz music] Well good morning, everybody. If you are interested in starting up a day spa business or a service business in general, we've got a really exciting episode of Fix Your Business this morning, so I'm your host Robin Waite for those who don't know me, I'm the founder of Fearless Business which is a coaching practise for coaches, consultants and freelancers. I've got a really fascinating guest with me today, Laura. She is a, comes from a teaching background but recently purchased or got involved with a day spa business in her local town. So welcome to the show, Laura.

Laura - Hi!

Robin - Don't be nervous, I'll treat you nicely. I think you've seen some of the other episodes so to kick things off, just give us a bit of background. So the business you kind of inherited a couple years ago, so talk to us about how you came to be sort of the owner of that business.

Laura - So, yeah. The business is two years old, or was two years old in June and I was approached two years ago by a friend and he was currently running the spa who didn't want to be in the spa anymore and makeup was her passion and she was going off to do that. And I wasn't necessarily happy in teaching role at the time so I was looking into how to cut my teaching hours. And I thought, why not? So that's been my background, I've also been a physical therapist, and I just thought, now is a good a time as any to make the jump and inherit a business with some employees and hit the ground running!

Robin - So you've been running it for two years now. So how, what sort of challenges have you come up against whilst you've been running the business?

Laura - Staff has been a big challenge and I inherited some staff along the way so it was all working together to change them how I like to work, making sure they were trained in relevant treatments and kinda putting us on the map, really because of where we're based, a lot of people sorta didn't know where we are or they still don't know where we are, or that we exist, so yeah just trying to put us on the map, have passionate, hardworking therapists that want to work.

Robin - 'Cause it's, I mean I've worked with several sort of, not necessarily spa-based businesses but medical aesthetics businesses, therapy businesses basically. And it is a bit of a grind, that it is an industry which is known for kinda working people really, really hard. Hopefully you're not one of those bosses and actually your staff enjoy working there and kind of despite the limitations you talked about. So you're actually based out of a sort of gym, leisure centre aren't you, at the moment?

Laura - Yeah, what would be a leisure complex.

Robin - And what would you change?

Laura - I would change the area I'm in and probably within a community and support, I would like to change that.

Robin - Yeah, and I know you've got plans. So the organisation where your business is currently based, they've just purchased, I don't know if we're allowed to talk about this live but they just purchased a new complex which potentially, you've got the opportunity to kinda go into. One of the things we discussed offline was have you got a back up plan?

So if that falls through. Because we're gonna dive, I think we're gonna dive into some of the nitty gritty now and so I was looking at your turnover for the business which you kind of mentioned fluctuates between 6 and 10k a month, roughly. You've kinda reached and breached that threshold which is actually really big milestone.

A lot of people panic over that and worry about, "oh now I've gotta charge my clients "20% more," well actually no, you don't because when you factor in costs and things like that, which generally you probably have to that on, actually that it kinda works out that you have to kinda charge a little bit more, but actually you save a bit as well, anyway. So that's a big milestone to get through, which you should congratulate yourself on.

However, however, this is where we kinda get into the nitty gritty side of it. So you have two part time therapists, one full time. So let's call it two full timers, plus yourself and your lavish lifestyle which you've got to fund. 6 to 10k is quite low in terms of having a team of sort of three people to cover the costs for. And really, the way I look at it is for every full time member of staff in a business, you should be pulling somewhere between 6 to 10k a month out per full time employee.

So hence the reason why I said off there that really your turnover should be double. So what we're gonna do is we're gonna work out how we can get you to a point whereby your turnover is double what it currently is. So would you say the spa, I mean obviously there is a crisis going on at the moment, pre-crisis, would you say that the spa was operating at full capacity?

Laura - No, so we operate, because we do all general beauty and aesthetics as well, we could have our salon and a day spa, so naturally, the spa packages would be on the weekend, Thursday to Sunday. And then we'd be general beauty salon for the rest of the week. However, pre-Covid, that was changing and spa days were filling throughout the week as well. But no, we definitely weren't to capacity.

Robin - Okay, talk to me about difference then for the viewer's kind of knowledge. What's the difference between beauty, therapy treatments and a spa day?

Laura - So, all of your general beauty treatments, manicures, pedicures, waxing, we have a lot of regular clientele and we have local people that come in, just have their treatments and leave. They just have their beauty treatments, then they go.

From a spa day point of view, it's mainly new people, they're coming for an occasion, it might be hen party, birthday party. They will come at 9:00 in the morning but they won't leave 'til 4:00, so they will use the wet facilities, so sauna, steam room, jacuzzi. We have a relaxation lounge, they'll have lunch.

They'll spend their day in their robes then they'll have a treatment. So that, to be fair the spa is probably the most cost-effective side of the business because you need a spa host, you need somebody there to entertain them, to make them tea, make them coffee. And I kinda pay a charge for them to use the wet facilities as well.

So out of whatever I charge them, I view the organisation some on top per person.

Robin - If I wanted to come in, have a wax or a manicure, how much would I, on average, you know and this is like, I say the word average, broad brush, but how much do you kind of, your average client who comes in just for the beauty treatments, how much do they spend?

Laura - Our spending per client, I actually do this little activity a little while back, it's probably only about between 27 and 35 pound per person.

Robin - Cool, okay. And then what about for the spa?

Laura - Depending on the package, they'll either spend 40 or if they come as a couple they'll spend 180. And they vary beyond, so the 40 pound for example, you know you get a 30 minute treatment. The 180 pound, you both get two hours of treatments and they vary in treatment time.

Robin - So that feels to me quite cheap. You know, I think about, again this is now an indication of my lavish lifestyle, but when we haven't got a crisis going on, I do occasionally treat myself to, we've got a couple of nice places up here, there's one called Calcot Spa up near Tetbury and you know, I'll go up there and have a 60 minute massage and spend 110 pounds.

Which is, you know, okay if you take your 40 minute, 40 pound for 30 minute treatment, doubled it, there's still an extra 30 pound sort of legroom there you know? Which is close to, it's like 40, 50% difference in price points there. So talk to me about what's going on there. Why couldn't you charge little bit more for what you're doing?

Laura - I think a lot of the stigma is around our area and how affluent the area is. And when I inherited, you know, that package was there for 55 pounds. So as I said to you earlier you know, I changed a lot when I took over. The name, the products, everything. Everything ran differently. And I kept that the same for the sake of the clients. Like well, I don't want to have this lovely new spa and no clients and so that was a contributing factor. The area, and yeah, I'd like to be able to charge more and say it's an experience because it's worth more, for me it's worth more.

Robin - So I was gonna say, somebody who's paying 40 pounds for a 30 minute treatment will pay 50 pounds for a 30 minute treatment, okay? It's what we kind of, things are always much worse in imagination than they are in reality. So you'll build up this story that you know, oh if I put my prices up, people will just leave in their droves.

That's actually not a bad thing, by the way, and I'll explain why in a second, I'm gonna go onto a screen share in a moment. But actually, the reality is, whenever I've gone through a price increase with a client, the numbers are never as bad as they think they are.

The number of clients leaving is never as bad as they think it will be. Also you've mentioned for the spa, for example, it's mostly new clients who are coming through you know, who haven't been exposed to your pricing.

Laura - Yeah, I was thinking earlier, we have some returners that come back regularly and you know, as often as they can, but it is mainly new people. New bookings.

Robin - Yeah, so I'm just gonna start off by just sharing with you this is an associate of mine, he runs business called the Tectona Partnerships. One of the chairman of the Chart Institute of Management Accountants and they did quite a big study around what happens when you increase your prices and what happens when you offer discounts.

So, if we were to look at, and probably a business like yours, I would say the gross profit, you know once you pay for your expenses and your direct costs, i.e. your employees per treatment, your gross profit is probably somewhere between 30 and 35%. So if we were just to look at even a 10% price increase on a 35% profit margin, gross profit margin.

You've actually got to sell 22% fewer of the same thing to make the same profit, okay? So a lot of people assume that if I put my prices up by 10%, I can only afford to lose 10% of my clients. Well actually, it's not true, you can afford to lose a lot more. So if you were to go from 40 to 50 pounds, for example, for your basic package, spa package, you know that's actually a 20% increase so if we were to kinda come down here, you're talking about somewhere close to, you could actually have 40% fewer clients coming through the spa and still make the same amount of money. Now I can guarantee that you won't have anywhere near close to 40% fewer clients.

You'll, it might drop by 10% or 15% or something like that, but it won't be anywhere near close to 40%. So actually, you don't just end up making 20% more, you end up making like 30, 40, 50% more profit on the bottom line. So if we were to extrapolate that out, and I'm kinda, you gave me some figures beforehand, you talked about your profit margin of being about 3k for the first financial year that you're in business.

Probably by the time we were to take into consideration just a simple 10 or 20% price increase, we've probably just doubled or even tripled your profit there with one decision, one key business decision. And actually, one of the things that probably you were worried about I'd imagine, correct me if I'm wrong is about perception, what are people gonna think of you for increasing your prices? Especially if you're in an area which you feel is slightly depressed anyway? I bet you're worried about people bad-mouthing you, Laura's profiteering, she's just after our money and all this kinda stuff.

Laura - 100%, yeah.

Robin - Okay, do you want people like that in your business as clients?

Laura - No, probably not.

Robin - Right, really, really important to recognise that. And I'll explain to you just a little exercise which we'll kinda walk through now just to illustrate or highlight the point. So, I call it the, it's called a PITAF chart, and you may have seen me talk about this before.

It's harder for your business 'cause you're gonna have lots a business paying in small chunks, but you'll get an idea about sort of where we're going with this, and essentially all it is, it's what we call a qualifier matrix. So on this bottom side of things here, we're gonna have that pain in the ass factor score on a scale of one to ten, ten being they're a massive pain in the ass.

They don't appreciate our value, they moan and bitch about stuff, they complain when things are running slightly behind or you know, things don't go quite to plan or whatever it might be. They're the ones who are kind of like, they'll even ask refunds despite the fact that you know, you've thrown absolutely everything at them, you just don't want clients like that. And then on the other matrix, we've got the amount of money which they're sort of spending with you. And so, what we end up with is group of clients who, let's say for example, say we've got the perfect clients up here who are spending quite a bit of money, they're not really that much pain in the ass, we can kinda plot all of our clients across this chart.

We then got another sort of subset of clients who are, they're not spending a lot of money but they're also not too much of a pain in the ass so we can kinda just, we like working with them, they're pleasant, you know, they come back regularly, but they kinda have the lowest, you know your cheapest treatment like every single time but it's okay, you know. But they're really good at kinda spreading the word about the business and bringing other people in, so that's great, we then got other people who spend a lot of money but have massive expectations, and then finally we have the group which we don't really want here, have massive expectations but spend very little.

I'll give you an example of this, so I ran a marketing business where we did web hosting and I've been through this process with several clients who run similar business as well, we used to charge, this is way back, like 15 years ago, like 10 pound a month for hosting for a website and in the last recession, everybody was driving the prices down like it was a race to the bottom to get all of the clients. And actually, most of those who were competing on price went out of business 'cause obviously, if, imagine this scenario where actually, if our story that we're telling ourselves is we gotta be the cheapest to get client but it means actually for every client we bring in, it costs us a tenner.

We're gonna go out of business. Doesn't make sense. Most business owners operate at "we'll just get by" which feels a little bit like perhaps that's where you're at at the moment with just getting by and just pay your sales enough money. I think there's a couple a reasons, we'll dig into the values around that in a second. So we'll just get by. And then you got other people who are just like, no my business needs be to be a rock because my business needs loads of money in order for it to thrive and not just survive. And in order to do that, I've gotta change my own value system so that my business, when I ask, when my business asks for money from clients, it asks for a lot of money. I'm not comfortable asking for a lot of money, but my business doesn't have a problem with it because the business needs to make money, that's what a business is. But we did, so everybody drives the prices down, we, I went the opposite way, I 5x-ed our hosting pound, we added a couple of extra things in, so a bit of extra support and things like that, so we went up to 50 pound a month, so we 5x-ed our price, right? Big diff, and my business partner was throwing his toys out the pram, couldn't possibly do that, it's a natural sign of distress, right?

What happened was interesting, though. Our revenue went up two and a half times, we did lose 40% of our clients, you know, it's a big chunk, but we 5x-ed our price. Those that stayed really valued the service that we were offering. Our support calls dropped by 80%. So we had a cacophony of pain in the ass clients that we'd taken on over the years because we thought that was the right way to grow a business, but it was just utterly destroying our business and kind of it was a bit of luck and a little bit of judgement and you know, good timing and the right decision, but we found that out. And actually the ones that did stay protested, ended up paying a bit more money, so they kind of went up into that amber area and over time, we could kind of re-educate them about what it was, our own value systems and what our business was all about and we can manage their expectations. So we could gradually migrate them across that top left corner, and same goes for this one. Some clients were like, no we don't wanna pay, so we set their expectations, right?

We're gonna move you down a package, you'll still pay the same, we're gonna downgrade your package but this is what, this is how we want you to behave. So we just kinda retrained them. And then over time, when they saw the value which we were delivering, we could then move them up packages as their business grew and put them in that top left quadrant. Now with your business, it's much more sort of, it's much more heavily commoditised, okay, so it's lots of little and often, basically.

Even still, a 20% price increase across the board, you will see, probably in two to three months time, you will see a dramatic increase in profitability of your business, you'll lose a few to start off with. Remember, new prospects, new clients who haven't come in to the spa before, haven't been exposed to your new prices, so they'll just think it's normal.

They'll think, Laura's lovely, we really like the spa, we really wanna have a treatment and oh, you know, a basic manicure, 35 pounds, bargain, I'll take two please! I think that's called a manicure and a pedicure isn't it?

Laura - Yeah. [Laura laughs]

Robin - Do you know what I mean? So now all of a sudden we're making an actual 10 or 20 pounds per treatment we weren't making before, multiply that by 100 treatments a month, yeah, it's an extra 1,000, it's an extra 2,000. And then, so long as you can keep your overheads flat, so keep your overheads where they are at the moment with your staffing costs, and obviously, direct costs in terms of products, obviously your premises costs as well, if you can keep those relatively flat, that 1,000 pounds you make up here just drops straight to the bottom line.

And you can pay yourself that, 'cause you deserve it, you're a business owner. And it doesn't matter whether you put 10 minutes of effort in or 10,000 hours of effort into it, you still deserve it as a business owner. 'Cause you took that risk, make sense?

Laura - Okay, yeah, yeah, it does.

Robin - I'm curious though, what do you think's driving, and this is a bit of a tricky question, but what do you think's driving this kind of, why are your prices set the way they are?

Laura - Probably a lot of that I kept them the same as the previous owner and then had a little look round and thought, I don't wanna price myself too high because I don't wanna have no customers. At the same time, I do realise that we are slightly luxurious, we have amazing facilities, you know and actually, the staff are trained to a really high standard. And but there's something, and it's my mental block that isn't allowing me to take that jump. And I'm not really sure what it is.

Robin - Well it's, I'm not gonna regress you into your childhood, but just so you're aware, our value systems are based on, a lot of it is inherited from our parents, so you know, a common theme especially around pricing is, and lot of people see pricing as binary, so it's cheap or it's expensive. We don't have money or we have loads of money.

Or it's abundance or scarcity is kinda how it is. And so think about that for a moment. When you're growing up, in your, not your household, this may or may not, and you don't have to reflect on this at all but for example, in my household I had big issue around money because there were always arguments about money in the house.

The fact that there was never enough money to go on holiday or there was never enough money to do stuff on the house or there was never enough money to pay for school fees, although, you know, and it was constant, that's all my parents kind of argued about was money.

And so, for a very long period of time, I had those issues around money, I inherited it. But actually, what happens is we inherit those value systems by the time we're three, believe it or not.

Laura - Oh.

Robin - Now, I don't know if you know many three year olds but their counting is good, but they're terrible at, their value system sucks 'cause their value system is, "Mommy, mommy, mommy, I want, I want "and I'm not gonna give you anything in return for it." It's just, you know.

Certainly can't add up. So all of the things that we need as adults we've actually inherited it by the time we're three. Lot of kind of unpicking and unpacking you have to go through to kind of get through that. Pricing around competition, interesting one. And I know you've seen my video on that. So again, imagine you got all of those people who are doing ten pound a treatment and they're kinda very quickly go into business and go out of business, imagine if we're comparing ourselves to them, and pricing the same as them because we think that everybody else is charging ten pound a treatment, so we'll charge that.

But they're all going out of business. It's like, it just doesn't make sense. Whenever you price your products, and this is something you can have a chat with your accountant about, you've got to price it so you've reached this happy point of equilibrium within your business where it's nicely profitable.

And a good profit, healthy net profit margin for a business like yours is gonna be somewhere between probably 15 and 20%. I would have thought probably for more of spa treatment end of things, I think that needs to be pushing somewhere close to 30%, it's a premium product so you gotta be really brave with the pricing on that and really kinda find ways to add value as well, like perceived value. That will make a massive difference to your business.

Your accountant will be able to tell you what your net profit, so if you turn over 100k and you make 3k in the first year, well your net profit's 3%, right? So actually, you've got to find ways to make five times the amount of profit to get into that nice, sort of sweet spot. And like I said, I think if you just added either 10 or 15, 20% price increase, you can see your turnover's gonna increase by that much and top line, it will just fall straight to the bottom line if you're savvy about it. Now you've got a nice healthy, profitable business. What can a business do when it's got more money?

Laura - Expand.

Robin - Expand, yeah, we've got, we can save, a, we can pay Laura, but also now b, we can put a bit of a kitty aside for doing marketing campaigns, to market our more expensive products and treatments. And it becomes this really nice healthy, sort of, I call it the Sales Cycle of Doom with small business.

I just very quickly, how most businesses operate is they sell something, they make a bit of money, they then deliver it and sometimes they then make a little bit more money on the side here, and then it kinda just starts again and we're just doing the sales, deliver, sales, deliver, sales, deliver and then, lo and behold, we get to the end of the month and go, scratch our head and go, "where's all the money gone?" And then we get ill, now we can't sell, now we can't deliver, right? We get better, back on. And this is, and it just continues.

That'll just continue ad infinitum, okay? And the only way to break out of this is to charge more money. Because it's like a you know, here's Laura at the centre of the, creating a gravitational field, you're setting the prices so therefore the prices are gravitating around you. If we can just tweak your mindset slightly that we can increase your prices, we can break free of that gravitational field and now, all of a sudden, so we had a time, so this is like the original amount of time we had, very short, very compressed, busy, frenetic, constant like you know, now all of a sudden, we increase our prices, we've got more time to deliver a better quality product and we make more money on the back end of it.

It makes sense when you think about it to increase your prices, okay? Now, I get, and again I don't know if this is a common theme or not, so there's gonna be something which I call the Durge of Facebook possibly happening in your business. So, do you get Facebook messages where people say, "Laura, how much does it cost for manicure?"

Laura - Yeah.

Robin - Yeah. And do you often give them the price there and then?

Laura - Yeah.

Robin - Yeah so what's happening is you're allowing them to go do a bit of window shopping, so they're on Facebook, imagine that you know, you've got Facebook high street and they're wandering around they found Laura's business, but they've also found a dozen other. And now they're just going oh well, so and so down the road's only charging 12, they've got a special on a manicure so I'll go there and it's 12 pounds, right? Do you think that, imagine now you were in a high street shop and people are coming in all the time, saying, how much is it for a manicure? Oh, 25? Okay, I'm gonna go somewhere else. Is that annoying or is it, like are we happy with that?

Laura - Yeah, it's annoying.

Robin - Right, so why do we allow it to happen on Facebook? Right? So yeah okay, a good reply to that would be, well listen I can, and it's a bit of a qualifier if you like, so you wanna see, you're trying to find out what type of a client they are. Are they a loyal client who is gonna come back time and time again and get amazing value from you and tell all of their friends?

Or are they somebody who's just window shopping for the cheapest manicure they can find? Right? And to be fair, 80% of the people who send you that message, they're just shopping for the cheapest, okay?

So I would ask you a question, which might, I would ask a question back on Facebook which is like, yeah of course I can give you a price for a manicure but I'm just curious, what are you looking for in a day spa or in a beauty business? And they might come back and say, either they'll do one of two things, one they'll say, I don't care, just give me the price. And in which case you say, I'm sorry but we're not, I'm not just gonna give you the price because we want loyal customers here.

The second option is they'll come back and say, oh that's a really interesting question actually. Well one of the things I'm really looking for is just to, I just wanna get away and just enjoy an hour's peace and quiet away from my husband and kids. I'm generalisation, I'm assuming it's a woman who's gonna be sending that message, there might be blokes who want manicures.

Probably are. So and then we can start a conversation basically with that person, start to go, well actually, listen I could just give you a price for a manicure and you could come in and have that but actually it sounds like you want a bit more of a break, so we do have a day spa as well.

But I'll tell you what we'll do. Seems though this is gonna be your first time in the spa, come in and have your manicure but what we'll do is we'll also hook you up with just a quick 15 minute foot rub whilst your in here, okay?

So you could be the most expensive, if the average price for manicure is 25 pounds, but yours is 40 pounds, but somebody then sees the perceived value of something like a 15 minute foot rub, for example, it's like perceived value is massive. So take my books for example. If you were to go into W.H. Smiths or Waterstones, how much would you pay for a book?

Laura - 20 pounds, 15, 20 pounds?

Robin - Yeah you know, sometimes a bit cheaper then that. 10, 15, 20 pounds. That book costs me 1 pound 82 to get it printed off, okay? So your perceived value of the cost of that book is five times, or even ten times higher than what I would pay for it. So the idea of offering somebody a 15 minute foot rub to show that that real value. And okay, so it's 15 minutes, you are giving away for free, but their perceived value of that is, well, are they gonna assign another 20, 30, 40 pounds to the price of that treatment?

But the key thing is, key thing is, we've started the conversation off, that's the top of our funnel. We've avoided the awkward pricing question for now. Kinda just put it off whilst we're understanding and finding out a little bit more about our client, and then gradually, we can kind of educate them about how good your day spa is compared to everybody else's.

I can guarantee, if you can get that client through the door for their manicure and their free 15 minute foot rub, and you could potentially do them both at the same time if you've got the manpower there.

And I would batch them, so I would have it so you got a group of those sort of free gift-y type treatments all happening on a Monday morning, or all on a Saturday morning or something like that. So economies of scale, so it just makes it more efficient.

And you got an apprentice, so she could be there busy doing those bits and pieces. Like the free nice-to-haves. I can guarantee, if you can get that person through the door do you think they're more likely to come back again? Or how much more likely do you think they're likely to come back again? Over the person who shops around, you happened to be the cheapest, and they said, yeah I'll book it and I'll come.

Laura - Yeah.

Robin - Yeah?

Laura - That's a good point, yeah.

Robin - So now what we're getting into, so I call it basically the five C's, okay?

So you, it's like basically a very simple marketing funnel. So it starts off with the content you're putting out which isn't gonna be any more, I don't know that you're doing this actually, I should have checked your Facebook page.

So what a lot of businesses similar to yours do is what I call "buy my shit" type offers. We've got 10 quid off for treatment, we've got 5 quid off this, come and buy my stuff!

Come and buy my stuff, come and buy my stuff, okay? Your content is now gonna be, if it's not that, hopefully it's not that, we wanna be using case studies, testimonials, reviews, we wanna take little videos with our clients when they come in, about little 30 second snippet about how amazing your spa is.

We wanna be publishing that sorta content. We wanna be talking about the fact that we don't do offers, but one of the things we do do is we add value, so if you wanna come in and experience it for a day, just come in and have a chat with us. So we're kind of starting to get appeasement, intrigue. But we don't know how much of that, so you gotta be putting the content out fairly frequently, telling stories, ask your clients why they come in to the spa in the first place. And it's not just to get a manicure.

Normally it's because it's to improve confidence, they wanna feel better about themselves, they wanna escape busy family life.

They love coming in just to chat to you, you and your team, they'll be a whole load of other reasons. So again, those are all bits of content we can put out. You know, tell stories about how Lucy came in. She's 32 year old, single mom of two, absolutely flat out all the time, so what we did is we actually arranged it, 'cause she's a really loyal customer, we actually arranged a free foot rub for her just to kinda make her day just that little bit better experience, that little bit better. This is what Lucy had to say about it.

hen you got a video testimony which pops up. It's gonna get people coming in inquiring in there droves. And then you can run a few local Facebook ads. That's something for another day. But anyway, content.

That will hopefully start conversations. How much it cost for a manicure? Then what we want to do is we want to do is we want to do what we call a consultation. So this is, I'm guessing you do things like massage treatments and things like that, do you, yeah? So again, they'll be, if people are kind of stressed and have joint aches and pains and things like that, massage is great, but we wanna actually get them in for a free consultation initially, 20 minute consultation, plus they can bolt on the treatment if they want. Because again, you need to get into the habit of selling courses of treatments for things like massage. Especially if they're symptomatic.

Now I'm a bit mindful here of kind of again, there's physiotherapy, which obviously you're not, versus just nice therapy, spa treatments and things like that. But again, being able to upsell people.

So when they come in for their free consultation, they're talking about how stressed they are and you can say, well actually it's been proven that if somebody comes in for a massage once a month, their stress levels reduce by 43%. You gotta go find the stats for that, I just made that up. But you know, have a consultation process where you're really getting to know the client. Make their first appointment that little bit longer. So you can work out exactly what they need. And then use it as an opportunity to upsell. It's like they're coming to you as an expert, effectively, to solve a problem. So solve the damn problem! Don't just sell 'em a manicure.

Go seven layers deep on it.

And there's nothing nefarious or persuasive or aggressive, no aggressive sales techniques in that, it's just about getting to know the person and then say well actually, look, do you know if you came back and did this monthly, actually your stress levels would go down massively? So how 'bout we get you booked in for the same time next month? Okay, really simple, like that's one statement you can produce, and there's a dozen which I could give you. So we have a consultation process.

That obviously leads to a conversion. So we convert the client. And then off the back of that we end up with loyal clients, so the five C's. Now these loyal clients, obviously, are referring people, they don't need to see all your content, they don't need to have that initial conversation.

They're like, you know, Sandra said that Laura's practise, spa was brilliant so I'm just gonna go and book him. Don't care about price, don't care about anything. I'll just get booked in. So we get that sort of word of mouth working. Hence why people are like, uh what's the cheapest manicure I can get?

They're not gonna, they're expectations are so low they're not gonna be out there like shouting, somebody might mention it and they'll go, oh yeah, I went to Laura's spa because it was the cheapest.

That's not a good recommendation. Right?

So that's why we wanna, that's why being the most expensive is often quite good because we get a better type of client coming through the business. Then the numbers are important, 'kay? 70, 10, 2. Now if I were to ask you what your conversation rate is at the moment, what would you say it is?

Laura - Nice people that do the consultation or have an inquiry, do follow up, but I'm not sure whether that's because it's for an occasion like a hen party, or.

Robin - Yeah so, when I ask this question, you've given me half the answer which I get quite often which is, oh when I get in front of people I convert pretty much all of them. So they'll be telling me their conversion rate is like 80 to 90%, right?

A good conversion rate is somewhere between one in five and one in three. We don't want all of the clients 'cause it fills up all of our capacity, it destroys the profitability in our business if we're not expensive enough. So a good conversion rate, so if even if we were to work on sort of one in three basis, so you can see here that you actually need to be turning away don't sign more clients than you're actually bringing in to the business.

Little mindset shift for you.

Everybody's focus in business is get more clients, get more clients, get more clients. My focus is, turn clients away, turn clients away, turn clients away.

Because then by virtue of fact of going through no, I'm gonna get the yes's that I want because I'm standing by my values for my business. And I've got the best clients for my business who get the best results, you see? Slightly different mindset. What I always say to people then is great, if your conversion rate is like 80, 90%, right and they go, well they normally say, well I think I'm a good sales person, yeah and my conversion rate is great. And I say cool, okay, well double your prices and then go and get the same conversion rate.

They go, well I couldn't possibly do that! I'm like great, that means you're not a good salesperson, 'cause a good salesman would be able to take the product, double the price and still sell the same amount, yeah?

Actually we wanna be getting you probably somewhere between that sort of 25 to 33 1/3 % of a conversion rate. Now to be fair, I think the therapy side of the business is slightly more commoditized so you can't afford to have a high conversion rate, that's fine, I think with the day spa side of things where you're getting hen parties and things like that coming in, we can afford to lower that conversion rate but be more profitable, does that make sense?

You need to, so most business owners focus on this number here, okay? I actually want you to start focusing on the conversations and the consultations, okay? You need to find a way of measuring that in your business. Those are what we call lead indicators. Imagine your goal was to sell 100 treatments a month, right?

But you get to the end of the month and you've only sold 50. There's nothing you can do to influence that up or down. All of the activity has lagged before that in order to get those 50 sales. We can't change it, now it's the end of the month. But if we set a target and the start of the month to get 100 sales, we get halfway through the month and we've only done, let's, I'm gonna have to go back to work the numbers out with you, but let's say we had, we wanted to do 100 here. Which means we gotta multiply this by 50.

So we gotta do 500 consultations, that's quite a lot. But let's just rut the numbers through. And then we've got to multiply that by 50 as well, so we've got to start 3,500 conversations. It's probably not quite, I think the numbers are a bit out of whack but you get the idea. But so we wanna get 100 of those.

We get halfway through the month, we haven't done 500, we've only done 100 of those. Now our lead indicators are telling us that we're gonna fall short of our goal. So we got two opportunities here, one is we just accept the fact that we're not gonna hit our goal and give up. The second one is we go, shit we haven't started enough conversations and we haven't booked enough consultations, what can we do to get more of those booked? So the more of those we're doing, natural byproduct is we're gonna sell some stuff, okay? So I call it, and this is a really important phrase I want you to remember, okay? And this is linked to that whole Facebook thing.

When somebody's there, shopping for a cheap manicure, 25 quid or whatever it is and you give them the price back, what you're doing is you're stepping over the pounds to get to the pennies.

'Cause you're desperate, you need that sale, I need that sale, Laura's gotta pay her mortgage and her bills, so Laura can't possibly turn down that sale 'cause I need that sale. And actually at that point, who's that sale about now?

Laura - The client, not about me.

Robin - Yeah, it should always be 100% about your client. It should never, you should never be trying to get that, so that's what being the cheapest is, it's trying to get the sale because you need the money. Actually, no, we've gotta flip that on it's head and go, no, no, we wanna be the best of the best of the best at everything that we do. And that means, our value system needs to be tweaked slightly and we need to start saying no to some of our clients.

Laura - Yeah. [Laura laughs]

Robin - So there we go, so.

Laura - They've got the regular price, yeah.

Robin - Hopefully, there's a few things in there that you can kind of pull out of that and start to apply for your business and I think, if I was going to summarise, I would just focus on your lead indicators, start measuring those, be fearless with your pricing.

Doesn't have to be crazy, don't have to double it or quintuple it like I did, you can just, a 10 or 20% increase across the board and especially on your more profitable products that people are buying regularly, you can be a bit more brave with those 'cause you've already got, clearly got a market for it.

Some products you might be, oh I'll just do 10%, some products will be like, well actually let's just go to 40% on it 'cause you make a lot more money out of it.

Be fearless with your pricing, and you can implement that straightaway. I would even, I bet you got your price on your website, haven't you, and on your Facebook page and things like that? I'd even be tempted.

Laura - I haven't on Facebook but I got it on my website, yeah.

Robin - I would even be tempted, whilst you're testing your pricing, so there's a validation process you're gonna go through here for a month or two, just pull the prices off your website so people actually have to inquire and speak to you.

Laura - Okay, yeah.

Robin - Because don't forget, again, you're gonna get people who are gonna be going to a dozen different websites and picking the cheapest, and you'll never have the opportunity to speak to them. That 70, 10, 2 starts with a conversation.

Laura - Yeah, that's very good, yeah.

Robin - Yeah? Don't think about price, we just need to get you into the spa because then we can show you the amazing value which we got, by the way, what we haven't put on our website is we've got this great offer on at the moment which is a 15 minute foot rob whilst your having your manicure, oh how much does a manicure cost?

Well it's 40 pounds, I know that may sound expensive, in fact you don't even have to justify it, say it's 40 pounds.

They may say, oh gosh, that's expensive. Say, well yes, but we are the best in the area. Why don't you just come down and experience it, look if you don't feel you get value for your money out of it, we'll just give you a refund. It's not worth our reputation to be taking money off people who don't get what we do.

Laura - Bold!

Robin - It's bold and there will be no other spas in local area that will be doing money back offers like that and don't forget, if a client comes in and for whatever reason, they don't get value out of it, you can hand on heart say, well actually, we either did the best possible thing and they just didn't get it, in which case, not the best client.

Or actually, oh gosh, do you know what, actually we messed something up, we could have done something better, you've learned from it, hopefully they might still come back because you've given them great value anyway. I've been doing money back guarantees on all of my products for 20 years, I've had two people ask for their money back.

Laura - I read that in your book and I think it worries me because it's not me doing the treatment, if it was me doing the treatment, I would be 100%, but when you've got staff, I think that's what worries me doing it that way.

Robin - So you need to, there'll be a way. And this is a little Brucey bonus that we can tag on to the end of this actually, 'cause we are kinda pretty much over time now. But with staff, have you got a handbook there? Have you done training with them on how, like your mission, vision, core values? Do they share in what the business is about? Do they get it?

Laura - They do, yeah. They are brilliant members of staff, they are.

Robin - So one of the things that you could say is we're gonna be implementing a, you could implement a bonus scheme which could be just an extra 100 pounds or 200 pounds which is split between all of them each month.

That if we get 100 happy clients at the end of every month, they get to share in the bonus pot. So little incentives like that will, by the way, how we get 100 happy clients is we make sure we're the best of the best of the best. So this is what, and what we're also gonna be doing is we're gonna be introducing a scheme whereby we offer a value-based money back scheme.

If the client comes in and they're just, they just don't, they're not happy, we have a no quibble, we just hit the refund key for them, that will obviously be deducted from the total of the hundred. So if we end up with 99 because you've not done the best job you possibly can do for whatever reason, you don't get a bonus, sorry!

So you can tie in, there's always ways to kinda try, you know tie in and get people motivated and if they're motivated by money, that's a good one, they might be motivated by other things. Well actually, what we'll also do is we'll chuck in, you get a little bit of a bonus in your pay packet but also you get a couple of free treatments off the rest of the team.

You know, we'll make time for it. You know, there's loads of different ways to incentivize it.

Laura - Perfect, thank you!

Robin - Cool, no worries.

Right, so for everybody who's been watching, listening. Hope you enjoyed this episode of Fix Your Business. If you want to be in Laura's seat, not physically, that would be a bit weird, but if you wanted to be sat where Laura's at and be a guest on Fix Your Business and let me tear your business apart and build it back up again, and hopefully make it better all you got to do is just email me, robin@fearless.biz.

Give me a few details about your business so I can make sure you're a good fit for the show. Don't forget as well to subscribe to the YouTube channel, that just helps other people to find the business. And if you particularly enjoyed this episode, there's a little thumbs up bottom, so give it a little like as well. Thanks, Laura, you've been a absolute star.

Laura - Thank you!

Robin - Hope you got value out of that and I'm sure that we'll be speaking at some point in the future as well.

Laura - Perfect, thanks Robin! [upbeat rock music]

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